NATIONWIDE today fired the latest volley in the battle for loan customers by promising £50 to anyone who switched to it from one of its rivals.

The UK's biggest building society estimates customers who hold loans with the big five banks are collectively overpaying by £500 million by failing to shop around for the best rate.

In a bid to encourage people to switch provider, it is offering £50 to anyone who transfers their loan to it from Barclays, Lloyds TSB, NatWest and the Royal Bank of Scotland, HSBC or Halifax and the Bank of Scotland.

To qualify for the money people must transfer their loan before the end of September and have an outstanding balance of at least £3,000 and 12 months to run before the end of the loan.

The group estimates that someone who took out a £5,000 loan over three years could save up to £720 over the life of the debt if they took advantage of its 6.7% rate compared with the deals offered by some of its rivals.

Steve Clode, marketing director of Nationwide, said: "Customers with the big five banks could save £500 million on their personal loans by coming to Nationwide.

"Unlike credit cards and current accounts, personal loan customers tend to remain with one provider for the life of the loan, which often means they are losing hundreds of pounds through paying higher rates than they need to."